12/10/2007

12-10-07 - 3

The AMT has gotten a lot of flack, but it's basically without merit. A lot of people will be affected by it, but the canard that that is just because of inflation is not true. Yes, the fact that it's not adjusted for inflation brings a lot of people under its domain, but the reason those people are so widely affected is because of the Bush tax cuts, which lowered their regular rate but not their AMT. People without a lot of deductions generally aren't affected at all.

Basically the AMT is a flat tax with a large deductible, something like a 28% tax with a $60k deductible. That's an extremely simple and fair system, and again the claims that the AMT is "too complex" or "unfair" are preposterous. It's the simplest and fairest tax we have. I'm quite sure all the anti-AMT pressure is coming from the super rich, who are the only people that are very heavily affected by the AMT.

The AMT disallows lots of deductions and income hiding schemes. Even with the AMT in place the super rich seem to generally find good ways to not pay taxes.

Rather than repeal the AMT we should repeal the whole regular tax code and just adopt the AMT. (A few little fixes to the AMT would be warranted, such as allowing the deduction of local and foreign taxes paid).

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